Samsung-LG-Philips rivalry stalls display-industry standard

SEOUL, South Korea  Rivalry between Samsung Electronics and LG-Philips is hanging up efforts by the South Korean display industry to set standards for next-generation thin-film-transistor LCDs. Such specs are needed if the nation's high-flying LCD makers are to stay competitive in the world market, industry experts here said. Yet the divisions between the two leading Korean display makers have become so deep that some industry watchers say it may take government arbitration to craft a standard.

Under growing pressure to agree on a display-size spec, Samsung and LG-Philips executives have recently signaled their willingness to resolve the standardization issue and head off government intervention.

Equipment and component manufacturers agree that the industry needs to develop standard LCD sizes for glass boards as a way to reduce investment risks and production costs while reaping the benefits of local production.

The glass boards for TFT LCDs vary in size according to application. For example, four 15-inch TFT LCDs can be manufactured with a 550 x 650-mm glass board, but only one display of that size can be made with a 370 x 470-mm board. In the latter case, the unit cost rises because of the large wasted board area compared with the small area actually used in the product.

Size standards for the so-called fifth generation of boards are expected to be especially difficult to agree upon, since these substrates will be much larger than previous generations. The new boards will also require new process technologies estimated to cost 50 percent more than previous generations of manufacturing technology.

Thus, manufacturers fear they could lose investment costs as high as $1.8 billion for new manufacturing technology if they pick the wrong board size. They are looking to top manufacturers like Samsung and LG-Philips to come to an agreement, setting a de facto standard for the rest of the industry.

Board standardization is perhaps even more important to equipment and component manufacturers than to display makers themselves. Were the LCD makers to divide on board size, these suppliers simply could not afford to invest in the process equipment needed for several sizes.

Samsung and LG-Philips have different strategies for LCD process technologies, products and marketing. Samsung has concentrated on the laptop computer market and standardized on its 17.1-inch product, while LG-Philips targets monitors and has settled on 18 inches.

LG-Philips has announced that its next-generation board size would tentatively be 1,000 x 1,200 mm but said it hasn't reached a final decision. For its part, Samsung has delayed its decision on a future glass board size altogether. Though both companies are trying to adopt bigger boards as they ramp up production of fifth-generation LCDs, they have balked at the steep investment cost and other risks.

The two display makers said they agree that an industry standard is the only alternative to loss of market share and declining fortunes. However, a long-running rivalry between the two has so far prevented a compromise on the glass specification.

"The government could help this problem to be sorted out," one industry watcher here said. "Strengthening the competitive power of the domestic TFT LCD industry and cultivating equipment and component companies could justify such intervention."

The matter takes on extra urgency as government officials and vendors alike look over their shoulders at the onslaught of rival Taiwanese and Japanese TFT LCD makers, to whom they fear losing market share.